De-dollarisation

De-dollarisation gets talked about a lot. The reality is more gradual than the headlines suggest — but the direction is real.

Here’s what’s actually happening.

The dollar’s share of global central bank reserves has fallen from around 70% in 2000 to roughly 58% today. Still dominant. But the trend has been consistent for twenty years.

The 2022 decision to freeze $300 billion in Russian central bank reserves held in Western financial institutions accelerated things significantly. The message to every country that doesn’t get along well with the US was clear: dollar reserves are only safe as long as Washington says they are. Countries that hadn’t been thinking seriously about alternatives started thinking seriously.

China and Russia now settle a large portion of their trade directly in yuan and rubles. Saudi Arabia has accepted yuan for oil sales — a crack in the petrodollar arrangement that would have been unthinkable a decade ago. The BRICS bloc keeps expanding and keeps discussing reserve currency alternatives.

None of this means the dollar is going away. It isn’t. The euro, the yuan, and every other alternative has its own problems as a global reserve currency. Countries don’t want to replace dollar dependence with yuan dependence.

Which is exactly where Bitcoin becomes interesting.

Bitcoin is the only asset in the conversation that is genuinely neutral. Gold is neutral but not digital and not easily transferable. The yuan is digital but very much not neutral. Bitcoin is both — and no country’s foreign policy is attached to it.

For countries that want to reduce dollar dependence without becoming dependent on someone else, Bitcoin is the only mathematically neutral option that’s ever existed.

Tomorrow: Bitcoin as neutral money — what that actually means.

— The Daily Bit